XML 42 R28.htm IDEA: XBRL DOCUMENT v3.25.3
INCOME TAXES
 12 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES:
The income tax provision (benefit) consisted of the following:
 202520242023
Current:
Federal$2,800 $2,897 $13,967 
State2,927 1,849 4,381 
Foreign11,813 10,480 5,052 
 17,540 15,226 23,400 
Deferred:
Federal11,728 (15,507)(14,466)
State1,807 (2,372)(1,887)
Foreign9,605 (7,344)(5,273)
23,140 (25,223)(21,626)
Total$40,680 $(9,997)$1,774 
The reconciliation of the federal statutory tax rate to the consolidated effective tax rate was as follows:

 202520242023
Federal statutory tax rate21.0 %21.0 %21.0 %
Effect of state income taxes, net of federal deduction25.4 %1.3 %3.8 %
Foreign statutory taxes compared to federal statutory rate(23.6)%19.6 %(0.7)%
Share-based compensation13.8 %(0.7)%3.6 %
Tax credits (net of withholding taxes)(8.5)%3.6 %(7.0)%
Goodwill write-down— %(4.9)%— %
Nontaxable income(2.0)%5.0 %(7.5)%
Nondeductible held-for-sale asset write-downs10.3 %(4.0)%— %
Change in realizability of foreign deferred tax assets43.8 %(30.7)%(9.5)%
Sale of SGK Business157.5 %— %— %
Pillar Two top-up tax5.3 %— %— %
Sale of foreign assets8.6 %— %— %
Other
(0.8)%4.2 %0.6 %
Effective tax rate250.8 %14.4 %4.3 %

The Company's consolidated income taxes for the year ended September 30, 2025 were an expense of $40,680, compared to a benefit of $9,997 for fiscal 2024, and an expense of $1,774 for fiscal 2023. The difference between the Company's consolidated income taxes for fiscal 2025 compared to fiscal 2024 partially resulted from the Company's fiscal 2025 pre-tax consolidated income position compared to a pre-tax consolidated loss for fiscal 2024. The fiscal 2025 tax rate included charges related to changes in the realizability of certain foreign deferred tax assets. These changes included both current year foreign net operating losses requiring a full valuation allowance as well as other changes in realizability of certain foreign net operating losses from prior years. The fiscal 2025 consolidated income before income taxes also reflected impacts related to the divestiture of the Company's interest in the SGK Business, the write down of certain net assets held-for-sale that were non-deductible for tax purposes, tax associated with the sale of certain foreign assets not offset by losses, and top-up tax related to the OECD Pillar Two global minimum tax. Additionally, the fiscal 2025 tax rate benefited from research and development and foreign tax credits. The fiscal 2024 effective tax rate benefited from research and development and foreign tax credits, and changes in realizability of certain foreign deferred tax assets due to the utilization of foreign tax net operating losses with a valuation allowance. The fiscal 2024 effective tax rate was negatively impacted by share-based compensation.

The difference between the Company's consolidated income taxes for fiscal 2024 compared to fiscal 2023 partially resulted from the Company's fiscal 2024 pre-tax consolidated loss position compared to pre-tax consolidated income for fiscal 2023. The fiscal 2024 tax rate included charges related to changes in the realizability of certain foreign deferred tax assets. These changes included both current year foreign net operating losses requiring a full valuation allowance as well as other changes in realizability of certain foreign net operating losses from prior years. The fiscal 2024 consolidated loss before income taxes also reflected a goodwill write-down and write-down of certain net assets held-for-sale that were non-deductible for tax purposes. Additionally, the fiscal 2024 tax rate benefited from research and development and foreign tax credits. The fiscal 2023 effective tax rate benefited from research and development and foreign tax credits, and changes in realizability of certain foreign deferred tax assets due to the utilization of foreign tax net operating losses with a valuation allowance. The fiscal 2023 effective tax rate was negatively impacted by share-based compensation.

On a combined basis, the Company's foreign subsidiaries had income before income taxes for the year ended September 30, 2025 of approximately $30,212, losses before income taxes for the year ended September 30, 2024 of approximately $39,069 and income before income taxes for the year ended September 30, 2023 of approximately $43,090. At September 30, 2025, undistributed earnings of foreign subsidiaries for which deferred income taxes have not been provided approximated $166,683.  Deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries since they have either been previously taxed, or are now exempt from tax, under the U.S. Tax Cuts and Jobs Act, or such earnings are considered to be reinvested indefinitely in foreign operations. A determination of the deferred tax liability to be recorded if the earnings were not permanently reinvested is not practicable.
The components of deferred tax assets and liabilities at September 30, 2025 and 2024 are as follows:
 20252024
Deferred tax assets:
Pension and postretirement benefits$5,953 $6,405 
Accruals and reserves not currently deductible16,734 16,992 
Income tax credit carryforward5,671 5,563 
Operating and capital loss carryforwards91,119 83,234 
Stock options8,701 8,266 
Research and development capitalization16,557 18,299 
Operating lease liability13,369 15,833 
Interest carryforward15,257 10,796 
Other9,420 6,078 
Total deferred tax assets182,781 171,466 
Valuation allowances(66,632)(45,462)
Net deferred tax assets116,149 126,004 
Deferred tax liabilities:  
Depreciation(21,130)(25,724)
Goodwill and intangible assets(74,471)(95,828)
Revenue recognized over time(32,359)(27,467)
Operating lease right-of-use assets(12,949)(15,282)
Investment in Propelis(24,320)— 
Other(452)(843)
Total deferred tax liabilities(165,681)(165,144)
Net deferred tax liability$(49,532)$(39,140)

At September 30, 2025, the Company had foreign net operating loss carryforwards of $433,770. The majority of the Company's foreign net operating losses have no expiration period. Certain of these carryforwards are subject to limitations on use due to tax rules affecting acquired tax attributes, loss sharing between group members, and business continuation. Therefore, the Company has established tax-effected valuation allowances against these tax benefits in the amount of $66,632 at September 30, 2025. The Company has recorded deferred tax assets of $3,977 for state net operating loss carryforwards, which will be available to offset future income tax liabilities.

Changes in the total amount of gross unrecognized tax benefits (excluding penalties and interest) are as follows:
 202520242023
Balance, beginning of year$4,506 $3,779 $4,123 
Increases for tax positions of prior years65 378 100 
Decreases for tax positions of prior years(2,648)— — 
Increases based on tax positions related to the current year1,340 1,044 769 
Decreases due to lapse of statute of limitation(291)(695)(1,213)
Balance, end of year$2,972 $4,506 $3,779 

The Company had unrecognized tax benefits of $2,972 at September 30, 2025, which would impact the annual effective tax rate.  It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $366 in the next 12 months primarily due to the completion of audits and the expiration of the statute of limitation related to specific tax positions.
The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes.  Total penalties and interest accrued were $241 and $588 at September 30, 2025 and 2024, respectively.  These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The provisions of the legislation that were effective for fiscal 2025 did not have a material impact on the Company's fiscal 2025 income tax expense. The Company is currently assessing the impact of the provisions of the OBBBA that are effective in future years on its future consolidated financial statements.

The Company is currently under examination in several tax jurisdictions and remains subject to examination until the statute of limitation expires for those tax jurisdictions. 

As of September 30, 2025, the tax years that remain subject to examination by major jurisdiction generally are:
United States - Federal2019, 2020, 2022 and forward
United States - State2021 and forward
Canada2021 and forward
Germany2020 and forward
United Kingdom2023 and forward
Australia2021 and forward
Singapore2021 and forward